Before the wide use of money, people were using precious metals, mostly gold, to trade it various goods. Even today, gold represents one of the most secure investments because of the stable price. However, like with the stock market and cryptocurrencies, precious metals are also susceptible to fluctuation. While this sort of investment is always popular, we can see that there is always a higher demand for gold during the economic crisis and recession. Considering that there is a great risk that the world will fall under the recession soon, according to many experts, gold is one of the best investments that could save you from great losses.
Also, you should know that gold stocks are different from physical material, especially in terms of trades, where you can invest in gold without the need to have it in person. If you are not familiar with all important aspects of trades with various products, there are experts like Regal Assets that can help you to become more successful in the trading business. When it comes to investing in gold, you should be aware of many factors that could affect its price. Here are some of the most important facts that you should know before investing in this precious metal.
1. Buying a Gold Certificate Can Be Risky
Buying the certificate represents a much simpler method of investing in gold. On the other hand, you should know that you can’t physically get the gold you bought. The main reason why this method is not secure because you might become a victim of a scam. Scams related to gold certificates are not rare, especially during the economic crisis. Also, the most secure way of buying these certificates is choosing a well-known company or a broker that is selling them.
2. You Should Have a Safe Place For Storing Gold
If you would rather buy gold to store it yourself than investing in a form similar to stocks, you should know that proper space is necessary for keeping it safe. There are several methods that you can choose. If you want to keep your gold at home, you must buy a high-quality safe. However, you can choose an option to store it in some bank or union, but that will require compensation. In case that you need to pay a high fee for storing your gold, your potential profit can be much lower.
3. There is a Difference Between Coins and Bullion
If you are interested in buying physical gold, there are two main types of it, bullion and coins. The main factors that determine the price of gold coins are not related only to the current price of gold on the market, because their rarity and design could affect its price as well. On the other side, bullion is directly linked to the current gold value. In that matter, investing in coins might be a much better solution since it could bring a bigger profit.
4. Taxes Are Calculated According to Collectible Rates
Investors see this tax rate as both the benefit and the downside. When you invest in physical gold, the tax rate can be lower. When you want to sell coins and bullion, you will have to pay a collectible rate. However, this can be an advantage only if your marginal rate is lower as well. In that matter, you should learn more about tax rates in your country and create a calculation that will show you if there is a chance of making a profit from trading with gold.
5. The Value of Gold is Not Always Connected to Dollar
One of the main reasons why people invest in gold, especially during some economic crisis, is because this asset represents a great way to overcome higher inflation. Gold will keep its steady price without some bigger changes even during the time where the stock market is having difficulties. Usually, the gold value will become higher when the price of the Dollar is going down, which makes it so attractive to investors in the first place. However, there is no exact pattern of how will the price of the gold change, and there are cases where gold dropped down along with stocks, dollars, and other assets. That means that investing in gold brings some uncertainties as well as other common assets like stocks or cryptocurrencies.
6. Investing in Gold Funds Can Bring Higher Profit
While buying coins and bullion allow you to own the gold physically, investing in funds might get you an even bigger profit. Storing the gold can be expensive, especially if you own a bigger amount of it. On the other side, buying gold shares require fewer expenses, and trading is much more convenient. Besides investing in gold shares, you could also choose to invest in stocks of some gold-mining organization. Some of the best gold funds that could bring you the highest profit are Quantium Gold Fund, Axis Gold Fund, SBI, Aditya, and Prudential Regular Gold. According to the current situation on the market, you can get around 45% in returns per year.
Like with any other sort of investment and trades, successful trading with gold requires proper knowledge of the market and analyses related to the potential changes in value that could happen in the future. You should know the difference between the ownership of physical gold and stocks, and how you should pay attention when buying certificates, and avoid any chance for a scam. Furthermore, while gold can be a great way to save you from losses during the recession, there is no guarantee that its price won’t fall along with other assets on the market.
There are some downsides of gold as well, such as volatility, lack of ability to have any purpose, and high fees for storing physical gold. However, high demand and the ability to save you from inflation make this asset one of the most popular in the world. While there are many other shares popular today, especially ones related to cryptocurrencies, gold still holds the biggest share of the global economy.